Telcos explore new frontiers

Last Monday marked the 14th anniversary of the liberalisation of the telecoms industry. While subscribers’ figures are approaching the 140 million mark from 450,000 analogue lines before the liberalisation, foreign direct investment (FDI) has gone up from $50million in 2001 to about $35 billion. With the achievement of these milestones, carriers and regulator are exploring data and digital services as new frontiers to redefine customers’ experience earn revenue. Lucas Ajanaku reports that there is still a long way to go

SHORTLY after the deregulation of the telecoms industry and the award of digital telephone licences to offer service through the global system for mobile communication (GSM) to the two early birds in 2001, the Chief Executive Officer, SO4 Engineering Limited, Soji Oluwasuyi, approached one of the service providers to acquire a telephone line. He was not subjected to the rigours of filling forms and waiting on a long queue. He paid N25,000 for his subscriber identity module (SIM) card and N35,000 for his Nokia 3310, a feature phone.

Oluwasuyi went home elated. “At least, this is better than trying to apply for a NITEL line for which you will not only wait for months after paying about N200,000 but also have to grease the palms of all manners of characters in the organisation before you will eventually get a line. I will no longer invade the privacy of my neighbour to make or receive calls,” he mused to himself.

Like a dammed river suddenly losing its fetters, telephone-hungry Nigerians took advantage of the new vistas opened by the telcos and started talking. It began with N50 per minute regardless of whether the line cut off within the first two seconds. Then the airtime too had the very provocative validity period. A myth was created around service by the first two players that per second billing could only be done through rocket science. Then came Globacom and the story changed. Today, calls could be made for between N10 and N9 per minute while the caller could pay less depending on the number of seconds used. Some of the operators even give one free minute for every minute spent on their network to their customers.

Speaking on the phenomenal growth in the industry, Executive Vice Chairman, the Nigerian Communications Commission (NCC), Dr, Eugene Juwah, said: “Over $32 billion investment has been recorded in the sector as at June 2014 from $50 million in year 2001. The investment stood at $18 billion in 2010 and $25 billion in 2012.”

He said this represents giant strides, adding that the commission will continue to regulate the industry in a way to continuously make it more attractive to global investment community.

Over the past 14 years, the telcos have been able to deploy some 68,124-kilometre optic fibre cable (OFC). Last year, an additional 38, 000 kilometre OFC were laid. Experts say this represents an increase of about 44.2 per cent investment in OFC by the telcos last year alone.

Services cannot be rendered without base transmission stations (BTS). The telcos have invested massively in building BTS across the country. According to the NCC, the telcos have built over 27, 000 BTS. But more still needs to be done in this area as there is still a deficit of some 53,000 BTS to assure seamless service delivery.

In line with the focus of the telcos on the provision of data and digital services, the BTS are gradually being upgraded from 2G to 2.75G and 3G. Some of the operators even say they have done trial of 4G or long term evolution (LTE). Currently, there is about 11 terabyte of bandwidth capacity brought into the country firms such as MainOne, Glo1, West African Cable Systems (WACS), among others, that have landing points in the country. .

The Ministry of Communication Technology said in the last two years, 2G-enabled sites have increased from 22, 578 to 28,289 while 3G-enabled sites have increased from less than 10,000 to 15,048 during the same period. It added that a backbone infrastructure project, started by the NCC, through the Universal Service Provision Fund (USPF), has also continued to bridge the gap between the underserved and unserved areas in the country, especially areas not considered commercially viable by the telcos.

Funded through the Universal Access Provision Fund of the NCC, subsidy is provided for the project which is designed to facilitate the bridging of the digital divide. It is expected to cover all the 774 local government areas of Nigeria. Minister of Communication Technology, Mrs Omobola Johnson, said about 1, 200 kilometres of OFC has also been run so far, adding that over 27,000 BTS had been deployed through the fund. She said the sector now contributes about 10 per cent to the national Gross Domestic Product (GDP).

Tariff has relatively been friendly. The NCC adopted a progressive reduction in interconnect rates whereby new entrants and small operators had termination rates for voice services pegged at N4.90 in April 2013, N4.40 in April 2014 and by April this year it will drop to N3.90 for all networks.

Mobile Number Portability (MNP) was introduced into the market to deepen competition. Though not many subscribers have yet taken advantage of the service, Director, Public Affairs, NCC, Tony Ojobo, said the fact that it was introduced into the market will make the operators to sit up and improve service quality since they know they might lose their customers without losing their numbers. “So, for us, it is not about total number of subscribers that have used the service but the freedom it has brought to the subscribers and the fact that it has deepened competition and consequently service quality,” he said.

With the revolution also came the Digital Bridge Institute (DBI) which was established by the NCC to produce the requisite manpower needs of the industry. DBI began in Abuja but now has campuses in Lagos, Enugu, Asaba, Yola, Oturkpo and Kano to represent the six geo-political zones of the country.

Juwah said the sector has also served as an enabler to other sectors of the economy as it is the only sector that runs 24 hours daily for the whole year. This may not be far from the truth as the sector has nipped in the bud, the billions of naira usually siphoned through fertiliser distribution by the ruling Peoples Democratic Party (PDP). Through the Growth Enhancement Scheme, the Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, was able to block the conduit pipe known as fertiliser and other inputs to the farmer directly through their cell phones using an e-wallet.

Chief Operating Officer, Computer Warehouse Group (CWG), Mr. James Agada, agrees no less. According to him, the sector has created jobs and fostered the emergence of e-commerce platforms such as Konga, Jumia and a host of others that have contributed enormously to the GDP.

He said: “Apart from multiple job creation and the multiplier effect on other sectors of the economy, telecoms sector is driving the growth of e-commerce with the likes of Jumia.com, Konga.com, Dealday.com, Kaymu.com, wakanow.com as major players.”

Chief Executive Officer and Executive Secretary, E-Payment Providers Association of Nigeria (E-PPAN), Mrs Regha Onajite, said the increasing volumes of e-banking transactions, being driven by the cashless policy of the Central Bank of Nigeria (CBN), “are all resting on the shoulder of the telecoms industry.”

Chairman, Association of Licensed Telecoms Operators of Nigeria (ALTON), Mr Gbenga Adebayo, said the telecoms sector has performed well as an enabler of most of the ICT-driven activities that have brought about efficiency in the country.

He said: “Today, we bank with ease, we do online cash transfers, we use Automated Teller Machines (ATM), mobile money operators, e-wallet in agriculture, telemedicine, among others, but we forget that all of these activities, in addition to their traditional duty of providing voice and internet service, run on the networks of telecoms companies. Yet, cashless transactions are on the rise every day.

“So, rather than criticise the sector for its little shortcomings, we should commend the players for helping the country to manage all these loads. I can imagine what will happen if telecoms companies decide not to carry any traffic (voice and data) in a day the way we witness it in the oil sector, where companies suddenly stop petrol distribution, thereby creating scarcity.

“There have been sanctions on erring operators especially on the issue of QoS and related issues in the last four years. But the commission wants to go beyond sanctions by ensuring that it helps in addressing the obstacles to smooth operations by the telcos collaboratively,” Juwah said in an interview.

The NCC said it has put in place adequate compliance, monitoring and enforcement activities which it said have worked very well.

As the telcos shift attention to the provision of data and digital services to their customers, the Association of Telecommunications Companies of Nigeria (ATCON) said the industry is still bedevilled with myriad of challenges which needed to be addressed with vigour.

Its President, Mr. Lanre Ajayi, identified the drawbacks to include vandalism of telecoms infrastructure, bottlenecks in securing approval to build infrastructure, multiple taxation/regulation, and others.

He said: “A number of challenges are affecting the spread of infrastructure and they include multiple taxation by different levels of government; environmental hostilities such as bringing down BTS, especially in parts of the north by terror groups and some government agencies; grant of permits challenge as well as vandalism and theft of telecoms equipment from sites.”

Ajayi said more still needed to be done by the regulator and players in order to continue the auspicious march towards fully transforming Nigeria into a truly knowledge economy and a major player on the global ICT development map.

The policies of the Central Bank of Nigeria (CBN) will have a far reaching effect on how far the telcos can go in their quest to chart a new revenue course from data and digital services provision. Two major ‘hostile’ policies have already been put in place by CBN. One is the devaluation of the naira which will increase the cost of importing telecoms equipment. The other is contained in a circular the apex bank issued to all authorised dealers late last month which directed that importation of ICT equipment shall be through the interbank market only. Endorsed by its Director, Trade & Exchange Department, O.I. Gbadamosi, he decreed: “The importation of electronics, finished products, information technology, generators, telecommunication equipment and invisible transactions importations shall henceforth be limited to the interbank market only.”

Justifying the directive, Gbadamosi told stakeholders that the policy was to maintain the existing stability in the foreign market and strengthen the various policy measures already initiated by the CBN.

Analysts have wondered the stability the CBN is referring to when the naira has kept falling against the dollar. “Which stability in the foreign exchange market is the CBN trying to maintain? These policies will do more harm than good to the economy. The impact of these policies will begin to manifest in the coming months, especially in an election year,” a sector analyst said.